The Federal Trade Commission’s (FTC’s) proposed ban on noncompete clauses likely won’t go into effect. But that doesn’t mean medical employers can ignore developments in this area of employment law. 

In April 2024, the FTC voted to finalize a rule declaring noncompete clauses “unfair methods of competition” for for-profit companies. While the rule would not apply to nonprofit organizations, like many health care systems, it would apply to for-profit subsidiaries or staffing companies serving medical employers. The rule is currently blocked in court, and the FTC has abandoned its appeal.

States are filling the gap, often with a spotlight on medical employers, explains Benjamin Dryden, partner and vice chair of the Antitrust and Competition Practice Group at law firm Foley & Lardner. “States have the power to regulate employment practices within their borders,” he says. “If I’m a medical employer, that’s where I would be focused: activity at the state level.”

Noncompete clauses raise specific concerns in health care, including:

• Continuity of care for patients who wish to continue seeing a specific doctor
• Changes to scope of practice if an employer restricts providers from certain service areas
• Disruptions for providers and their families if relocation is required

Many states are addressing these issues with legislation. For example, Minnesota has had a law in effect since 2023, an Arkansas law took effect in August 2025, and a Maryland law began limiting noncompete agreements for physicians in July 2025, requiring notification of the physician’s new practice location if requested.

Dryden recommends considering other contract terms, based on the local competitive landscape and medical specialty, noting that terms could have different implications for different specialties. Alternative strategies for protecting practice interests include:

• Nonsolicitation agreements, which prohibit a provider from inviting patients or colleagues to follow them to a new practice for a set time.
• Nondisclosure agreements, which ban the sharing of proprietary business information.
• Fixed-duration contracts, which specify a set length of time for employment.

Dryden points out that one reason the FTC pursued a federal rule was to resolve the patchwork of state laws. Because health care providers and patients cross state lines, “it’s arguably not ideal if your legal rights fundamentally change from one state to another. But the counterargument is that one size does not fit all, and states are being very thoughtful in how they draw these lines.”